4-hour timeframe
Technical details:
Higher linear regression channel: direction - downward.
Lower linear regression channel: direction - upward.
Moving average (20; smoothed) - upward.
CCI: 116.3347
The British pound continued its upward movement throughout the first trading day of the week. At the moment, the Murray level of "5/8"-1.2512 has been overcome and there is no sign of the beginning of a correction. Thus, after a very small correction, the upward trend is resumed. For the euro/dollar pair, if both channels of linear regression turned sideways, then here the higher channel is confidently directed down, and the lower channel is up, which indicates any movement other than sideways. Although a few days ago it seemed that the pair will be in the flat for some time. However, despite the absolutely empty fundamental and macroeconomic backgrounds, the British pound continues to grow in value against the US currency.
Over the past three years, the UK has clearly been suffering from an evil fate. There is nothing wrong with the fact that Britain has decided to leave the European Union. The European principle of democracy fully supports such decisions. The British nation chose to be independent of the EU in a completely fair referendum, although with a minimal margin. This happened in 2016. We understand that such serious foreign policy processes, with the breaking of a lot of established ties, agreements, chains, and rules, can not be completed in a couple of months. Even the trade talks between China and the United States, which were instigated by Washington out of the blue, lasted more than a year, and this is only the first phase. However, in fact, all this time the UK is prevented from leaving the EU not by the complexity of the process itself, but by some absolutely punning things. After almost three years, the highest British authorities could not simply decide on what terms to break off relations with the European Union. More precisely, there were many proposals, but none of them gained the necessary majority. And then there were regular perturbations in the British Parliament. First, David Cameron, who was in favor of maintaining EU membership, resigned, then Theresa May, who simply failed to reach an agreement with the Parliament, resigned. Then it was Boris Johnson's turn to suffer because he also did not agree with the majority of parliamentarians. His plan for a "divorce" from Brussels, according to opposition leader Jeremy Corbyn, was even worse than Theresa May's "Chequers" plan. However, Johnson made a "horse move" and initiated parliamentary re-elections. And Jeremy Corbyn thought that he could win over Johnson and supported this idea. However, he overlooked that the British are already so tired of this "divorce" process that they were ready to vote for anyone, just to guarantee the fastest possible completion of Brexit or its cancellation. Johnson proposed the first option, Corbyn did not offer anything. It all ended in a crushing defeat for the Laborites, and Johnson was on the throne. Not because he is a strong politician and the British associated his name with the prosperity of the Kingdom, but because he is the only one who clearly promoted Brexit without any delays and concessions. The new Parliament, of course, approved Johnson's proposal for Brexit (of course, he could not approve it, if earlier Johnson simply kicked out from the Conservative party all those who refused to support his initiatives) and the next act of the "Marlaison ballet" came. Then, when, apparently, nothing could stop Britain from leaving the Alliance, at first negotiations about future relations between the parties almost immediately reached an impasse, and then the "coronavirus" epidemic started, which put a non-indefinite pause on any negotiations between London and Brussels. And now we still do not know when Brexit will take place, whether the "transition period" will continue, which will expire on December 31, 2020, and what will the future hold for Britain in general? European deputies have been in favor of extending the "transition period" from the very beginning, as it is impossible to agree on all aspects of the future agreement in 10 months. In fact, there are already 8 months left to agree on the same agreement. And with each month of the epidemic, there is less time to make a deal. Most importantly, London and Brussels must decide whether to extend the "transition period" until July 1. And such a decision can only be made based on the results of the first rounds of negotiations between the groups of Michel Barnier and David Frost, which were supposed to take place every two weeks. Since there have not been any real negotiations yet, it is not clear what the decision will be based on. For example, the Czech politician Katerina Konecna believes: "The goal to complete the negotiations before the end of the transition period was initially too ambitious. This deadline was set by the British conservatives in their dreams, and it has nothing to do with reality." Her speech does not even refer to July 1, but to December 31. Many European parliamentarians are of the same opinion. However, even with the global pandemic, Boris Johnson continues to stand his ground: no postponements or delays. Even the fact that the heads of the negotiating teams, Michel Barnier and David Frost, and later himself, fell ill with the "coronavirus" does not affect Johnson's plan in any way. And this plan is now called very simply. Just as Johnson originally intended – a "hard" Brexit. That is what the British Parliament fought against for three years. And of course, how can I not remember the position of Boris Johnson personally again? "Britain is trying to get as many benefits as possible from the European single market, imposing as few responsibilities as possible," Katerina Konecna believes. The task of the European Union is to make sure that the UK does not enjoy the same rights and privileges as the countries participating in the Bloc.
From all of the above, it only follows that the entire negotiation process may drag on for several more years if Boris Johnson looks the truth in the face and stops driving the British locomotive towards the abyss. Of course, the British Prime Minister's bluff and threats may work, but there is very little time for any negotiations, until July 1 - no more than 2.5 months. Recall that Johnson will return to the performance of his duties on the recommendations of doctors no earlier than in a month.
The average volatility of the pound/dollar pair continues to decline and is currently already 122 points. The activity of traders continues to fall and this can not but please. On Tuesday, April 14, we expect movement within the channel, limited by the levels of 1.2407 and 1.2651. The reversal of the Heiken Ashi indicator downwards signals a round of corrective movement.
Nearest support levels:
S1 - 1.2451
S2 - 1.2390
S3 - 1.2329
Nearest resistance levels:
R1 - 1.2512
R2 - 1.2573
R3 - 1.2634
Trading recommendations:
The pound/dollar pair continues to trade with an upward bias on the 4-hour timeframe. Thus, it is now recommended to stay in the purchases of the pound with the goals of 1.2573 and 1.2634 until the reversal of the Heiken Ashi indicator down. It is recommended to open sell positions no earlier than when the bears overcome the moving average with the first goal at the level of 1.2329.
